Eliminar etiqueta vacía de xmltype oracle

Usa DELETEXML y busque el XPath //*[not(text())][not(*)] para encontrar elementos que no contengan texto ni elementos secundarios:

SQL Fiddle

Configuración del esquema de Oracle 11g R2 :

CREATE TABLE table_name ( xml ) AS
SELECT XMLTYPE( '<MESSAGE>
<LOCATIONS>
  <LOCATION_ID>9999</LOCATION_ID>
  <LOC_TYPE>S</LOC_TYPE>
  <NAME>Test Location</NAME> 
  <PHONE_NUM>08 </PHONE_NUM>
   <LAST_MODIFIED_BY/>
   <LAST_MODIFIED_DATE/>
   <POS_CODE/>
</LOCATIONS>
</MESSAGE>' ) FROM DUAL;

Consulta 1 :

SELECT DELETEXML(
         xml,
         '//*[not(text())][not(*)]'
       ).getStringVal()
FROM   table_name

Resultados :

|                                                                                            DELETEXML(XML,'//*[NOT(TEXT())][NOT(*)]').GETSTRINGVAL() |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|
| <MESSAGE><LOCATIONS><LOCATION_ID>9999</LOCATION_ID><LOC_TYPE>S</LOC_TYPE><NAME>Test Location</NAME><PHONE_NUM>08 </PHONE_NUM></LOCATIONS></MESSAGE> |